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Congestion to Continue Amid Peak Freight Season, Price of Ship Fuel Continues to Sink, New Cargo Terminal Opens at Zhengzhou Xinzheng International Airport.

By August 25, 2022 No Comments

Ocean

Congestion to continue amid peak freight season. Projections indicate that it could be long into 2023 before a stabilization in freight rates happens as supply chains around the world continue to be vulnerable to interruptions or disruptions. More sailings are expected to be canceled as manufacturers will be shut down so less trade will move out of the ports as we head into Golden Week, the eight-day holiday in the first week of October in China. The next phase of the IMO program to reduce carbon emissions in maritime will take vessels out of rotation, putting more pressure on freight prices, according to CNBC. 

Price of ship fuel continues to sink. Following an extreme spike after Russia invaded Ukraine, the price of fuel for commercial ships hit all-time highs in May and June. In July, however, the price of ship fuel began to plummet and is now sitting nearly at prewar levels. According to Ship & Bunker, the average price for fuel known as very low sulfur fuel oil (VLSFO, sulfur content: 0.5%) at the world’s top 20 refueling hubs was $800 per ton as of Friday, down 29% from the all-time high of $1,125.50 on May 14, according to FreightWaves

Ports

Mojave Inland Port moves forward with plans to ease seaport congestion. Officials in California recently approved the site plan for the Mojave Inland Port project to move forward with a transportation and logistics hub “aimed at being a critical relief valve for West Coast gateways choking with container traffic,” according to FreightWaves. Richard Kellogg, chair of Pioneer Partners, said that “the root cause of the congestion is that the ports of Los Angeles and Long Beach have run out of land, and the Los Angeles Basin in general has run out of land for big logistics centers.” The port is being developed by Houston-based Pioneer Partners on about 400 acres of land the firm already owns, about 90 miles northwest of Los Angeles. The port will be a container hub that will receive cargo by rail from Los Angeles and Long Beach and transfer it to trucks for further nationwide distribution. 

Centerm congestion impact on service. This week, Maersk released the third update in continuation to previous advisories on the situation in Western Canada and significant congestion at Centerm. Read the full impact update here.

Customs

Adjustment of certain COBRA customs user fees. CSMS #53027584: Adjustment of certain COBRA customs user fees and limitations for Fiscal Year 2023 will deploy in the Certification and Production environments on August 25, 2022. The adjustments include, but are not limited to:

  • Formal MPF (499) limits changed to minimum $29.66 / maximum $575.35;
  • Informal MPF (automated and not prepared by CBP personnel) (311) changed to $2.37;
  • Dutiable Mail Fee (496) changed to $6.52; 
  • Surcharge for Manual Entry or Release (500) changed to $3.56.

These adjusted fee amounts and limitations will be applied to importations effective October 1, 2022. Note that the new amount will be in effect for a summary pre-filed prior to October 1, 2022 if the relevant entry date is on or after October 1, 2022. An updated version of the ACE CATAIR Entry Summary Create/Update is posted to CBP.gov. 

Trucking

Heartland Express acquires CFI assets in deal to create 8th-largest US truckload fleet. This week, Heartland Express announced their acquisition of Contract Freighters Inc.’s (CFI) truckload unit and its logistics unit in Mexico from TFI International for $525 million. The acquisition will make Heartland the eighth-largest TL fleet and the third-largest asset-based, irregular route carrier in the U.S., with approximately 5,550 tractors, 17,800 trailers and $1.3 billion in annual revenue, according to FreightWaves

Cummins to utilize Gatik tech in some trucks. Cummins recently announced its plans to integrate autonomous technology from Gatik with Cummins’ drive-by-wire solution. The combined solution will be used on Isuzu Class 6 FTR model box trucks with the Cummins B6.7 engine. Gatik has been using the Isuzu model in its fleet, most recently adding the trucks to a pilot in Texas. In that effort, Gatik has partnered with KBX Logistics to haul product from Georgia-Pacific facilities in the area to 34 local Sam’s Club stores, according to FreightWaves.

Rail

Railroads still in talks to avoid worker strikes this fall. Last week, a board appointed by the Biden administration issued a set of recommendations aimed at resolving a dispute between unions and rail companies. Failure for the two sides to come to an agreement could result in a national rail strike of 115,000 workers this fall, ahead of midterm elections, according to Bloomberg Law’s Ian Kullgren

Air

New cargo terminal opens at Zhengzhou Xinzheng International Airport. The new Zhengzhou North Cargo Terminal at the Henan Province hub of the Zhengzhou Xinzheng International Airport has begun to receive shipments as it prepares for full opening. The 160,000 sq m terminal will add 600,000 tons of freight capacity, bringing the airport’s total air cargo capacity to 1.1m tons, according to AirCargoNews. “The Zhengzhou Terminal has been growing in importance as China’s Central Plains area continues to open up to more manufacturing and trade activity,” freight forwarder Dimerco Express said. The new terminal offers automated scanning, weighing and cargo transport, and has a large cold chain area, a new customs inspection area, and 101 shipping docks. 

International

Port of Felixstowe workers begin strike. An eight day strike began this week at the busiest container port in the U.K. Workers at the Port of Felixstowe are striking over pay, joining workers from other parts of the transportation sector in the U.K. who have already gone on strike this year. The week of the strike could cost the U.K. economy an estimated £700 million, or $824 million in trade.

Other

DOL accuses Hyundai supplier of violating child labor laws. This week, the U.S. Department of Labor (DOL) accused a Korean-owned auto parts maker and supplier of Hyundai Motor Co of violating federal child labor laws at an Alabama factory, federal court filings reviewed by Reuters show. According to filings on Monday with the U.S. District Court for the Middle District of Alabama, the DOL said that SL Alabama LLC, a subsidiary of South Korea’s SL Corp (005850.KS), employed underage workers at its Alexander City, Alabama factory. SL Alabama “repeatedly violated” labor regulations by “employing oppressive child labor” and “minors under the age of 16,” since last November, the DOL said in a six-page complaint.

Theories of giant waves that suddenly appear and vanish. Here’s an interesting read: “Maritime folklore tells stories of giant waves that suddenly appear on the ocean and disappear just as quickly. While many people dismiss the existence of such waves as mythology, there are accounts of oil rigs and ships having encountered giant waves and giant troughs that suddenly appear and disappear. There are theories that seek to explain such occurrences that could occur more frequently as a result of climate change.” You can read the full story here. 

Porsche auctions “Cars” model for record-breaking $3.6 million. Porsche recently announced it would be building a 911 inspired by Sally Carrera from Pixar’s Cars, complete with the bright blue paint and special design cues. That one-off Sally proved to be a hot commodity– it just sold for a record-breaking $3.6 million at the RM Sotheby’s Monterey Auction. Porsche said via press release that the winning offer came via telephone, and the bidder is anonymous at this time. The record-breaking bid made this car the most expensive new Porsche ever sold at auction. The money is going to two charities: Girls Inc. and USA for UNHCR.

Porsche Sally Car